Bank franchise - VAT taxation


The development of the franchise network has become an important element of the banks' strategy. Banks decide to develop franchise outlets in order to optimize the maintenance costs of the financial product distribution network. Partner outlets complement your own distribution channel. The franchise network is gaining importance every year. More and more banks decide to develop it. A bank's franchise offers many benefits to both franchisors and franchisees.

Bank franchise - agreement

A franchise agreement has two parties: the franchisor and the franchisee. Under this agreement, the franchisor grants the franchisee a permit (franchise) to run a specific business activity within the network under the name of the franchisor. On the other hand, the franchisee undertakes to conduct such activity in accordance with the recommendations of the franchisor (running a business according to strictly defined rules specified in the contract). Moreover, the franchisee undertakes to pay the franchisor the remuneration specified in the contract. In the case of a franchise agreement, both parties are both legally and financially separate economic entities. The franchisee is obliged to run a specific business on his own behalf and for his own account, in compliance with strictly defined rules set by the franchisor.

Bank - banking activity

A bank is a legal entity that carries out, on the basis of appropriate permits, business activities consisting in accepting deposits, granting loans and performing other activities specified by law (in Poland, the Banking Law) and listed in the bank's statute.

The bank is an intermediary institution that allows the use of funds of those clients with capital surpluses by those clients with a shortage of capital. Due to the type of services provided and the disposal of funds entrusted by clients (most often in the form of deposits), banks are classified as so-called institutions of public trust. Together with the central bank, they form a two-tier banking system. One of the features that distinguishes the banking sector from other elements of the financial system is the deposit guarantee system. The purpose of the guarantee activity is to provide depositors with the payment, up to the amount specified by law, of guaranteed funds in the event of their unavailability (e.g. in the event of bankruptcy).

Taxation of banking services in VAT

Pursuant to Art. 43 sec. 1 point 38 of the Act of March 11, 2004 on tax on goods and services (i.e. Journal of Laws of 2017, item 1221 as amended), hereinafter referred to as the "VAT Act", is exempt from service tax the granting of credit or cash advances and intermediation services in the provision of credit or cash advances, and the management of credit or cash advances by the lender or lender.

Pursuant to Art. 43 sec. 1 point 40 of the VAT Act, services in the field of cash deposits, keeping cash accounts, all kinds of payment transactions, money orders and transfers, debts, checks and bills of exchange, as well as intermediation services in the provision of these services, are exempt from tax.

Taking into account the above provisions, from the point of view of the VAT Act, all services provided by banks, which include various types of financial services, are exempt from this tax.

Bank franchise services

At the outset, it should be stated that a franchise outlet is a bank branch run by the bank in cooperation with a selected business partner.The franchise facility operates under the bank's license, based on banking standards, and also under the logo provided by the bank. It also operates on the basis of its own business. The business is therefore self-employed. Profit is the remuneration paid by the bank, which most often takes the form of a commission depending on the sales results of individual banking products.

To sum up, a franchise outlet operates in the same way as a bank. Both the form of service and the financial products offered therein are the same or very similar to those offered by the bank. The franchisee provides the same services as a bank.

VAT exemption for the services of a bank franchisee

In the light of the above provisions, it follows that the activities performed by the taxpayer as part of the bank's franchise are entirely exempt from VAT. The franchisee performs the same financial services as the bank, thus taxing them differently would be contrary to the rules of VAT taxation.

The above is confirmed by the individual interpretation of the Director of the Tax Chamber in Bydgoszcz of 27 August 2012, number ITPP1 / 443-618 / 12 / AJ, in which we read that:

"The fact of the exemption from financial services tax is confirmed by the jurisprudence of the Court of Justice of the European Union. In the judgment in case C-2/95 between Sparekassernes Datacenter (SDC) and Skatteministeriet (Denmark), the Court stated that" the exemption for financial services does not depend on this. whether the service is provided by an institution that has a legal relationship with the final recipient. The fact that the transaction is performed by a third party, but from the end recipient's point of view appears to be a service provided by the bank, does not preclude it from being exempted. " In conclusion, it can be stated that according to the CJEU, a financial service provided by a third party does not lose the quality of such a service in the present situation.

The analysis of the presented future event leads to the conclusion that if, under the fanchising agreement, you will perform activities in the field of insurance services, loan or cash loan services, cash account maintenance services, all kinds of payment transactions, money orders and transfers, how rightly You indicated in the submitted application, you will be able to benefit from the exemption from tax on goods and services on the basis of the referred art. 43 sec. 1 point 37, 38 and 40 of the Act, assuming that the activities performed by you will not be covered by the exemptions referred to in the quoted Art. 43 sec. 14 and 15 of the Act. "

The bank's franchisee also provides consulting services

Consulting elements are also provided as part of the bank's franchise services. In this case, the above services are closely related to financial services provided under the bank's franchise. However, the above does not mean that the consultancy services provided are not exempt from VAT.

This is confirmed by the individual interpretation of the Director of the Tax Chamber in Katowice of February 16, 2015, number IBPP2 / 443-1103 / 14 / WN, in which we read that:

"Under the agreement with the client, the Applicant undertakes to take all necessary steps to enable the client to obtain a credit offer appropriate for him, taking into account the client's needs and the requirements of the financing entity as to the financial situation and solvency of the client applying for the loan, for this purpose the Applicant makes following steps:

  • checks the initial assessment of the customer's creditworthiness in order to determine the correct strategy for obtaining a loan;

  • informs the client about the conditions of concluding individual loan agreements offered by banks

  • provides information on the conditions that the customer should meet in order to be able to use the selected financial product from the bank's offer;

  • collects and makes available to the customer the applicable forms and forms necessary to conclude a loan agreement;

  • provides all necessary information related to the completion of documents necessary to submit an application for a loan to the bank;

  • provides professional assistance in drawing up a loan application for a client, taking into account the bank's detailed guidelines when applying for a selected loan product;

  • acts as an intermediary in customer-bank relations, in particular by submitting a loan application and other required documents to the bank and the need to complete the documentation necessary for the bank to make a decision;

  • performs all necessary activities to enable or indicate an opportunity to the customer to conclude a loan agreement.

All actions taken are aimed at concluding a loan agreement between the client and the bank, and for this purpose the Applicant shall take all possible steps.

Remuneration for services provided to the client is due only after a positive credit decision of the bank and is paid by the client to the Applicant in the form of commission. The client provides the Applicant with exclusivity for the performance of this agreement. In particular, the client may not conclude any similar agreement with the bank indicated by the Applicant without the Applicant's participation.

The above activities provided by the Applicant are not of the nature and do not include consultancy services referred to in art. 43 sec. 15 of the Act of March 11, 2004 on tax on goods and services. "